Mobile Gaming Startup Pocket Gems Raises $5 Million From Sequoia Capital

Most of the buzz around casual gaming may be focused on Facebook, but it’s also becoming a powerful phenomenon on the iPhone, where some companies like ngmoco have managed to turn their free applications into revenue powerhouses fueled by virtual goods and in-app purchases. Another startup that’s done particularly well with this model has been Streetview Labs, the company behind hits like Tap Farm and Tap Zoo.

Today, the company is announcing that it’s closed a $5 million funding round led by Sequoia Capital, with participation from Michael Dearing (formerly of eBay, currently an associate at Stanford University’s Institute of Design), Jeff Fluhr (founder/CEO of StubHub), and Omar Hamoui (founder of AdMob). As part of the deal Sequoia’s Jim Goetz will be joining the startup’s board.

And, in conjunction with the funding announcement, Streetview has some other news: it’s renaming itself to Pocket Gems — a good move, given that the old name sounded like some sort of Google side-project.

Pocket Gems got its start a year ago, when it released Tap Farm — a game that shared a lot in common with FarmVille and other farming sims, but with a key difference: it was actually available on the iPhone (FarmVille didn’t launch a mobile app til June of this year). That game did very well, and since then the company’s library has grown to five games, the most recent of which is Tap Zoo (which is a bit like a zoo-themed version of Sim Theme Park).

CEO Daniel Terry says that each of the company’s games have been in Apple’s top ten charts (which is no small feat), and that it currently has two of the App Store’s top-25 grossing applications (Tap Zoo and a holiday themed version of the game called Tap Zoo: Christmas).

Between all of these games Pocket Gems has 15 million application installs, and that’s just on the iPhone. Soon, Pocket Gems will be expanding to Android and the iPad, which will increase its audience significantly.

The company currently has 11 employees — Terry says that it’s looking to hire 45 over the next year. Today’s funding will help with that, but the fact that the company is “very cashflow positive”, according to Terry, will also help .